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INVESTMENT OPTIONS

The Fire and Emergency Services Superannuation Fund (FES Super) offers a range of seven investment options to all members with an Accumulation Account. This means you can take an active role in the growth of your retirement savings and select an investment option (or options) to suit your personal approach towards investment risk and return.

If you have investments outside FES Super, you can choose an investment option for your superannuation that fits in with your overall investment savings strategy.

As Defined Benefit calculations are based on membership period and final average salary and are not subject to investment returns, if you hold a Defined Benefit account, you are not able to direct your savings to a particular investment option. However, if you also make voluntary contributions, or have rolled or transferred other money into FES Super, that money will be invested in an Accumulation Account for you where you can choose an investment option (or options) to suit your needs.

As everyone’s financial situation is different, the investment option you choose should be determined with your personal circumstances in mind..

When you are making a decision about how you want your retirement savings invested, there are a number of things to think about, including:

  • Your savings goals
  • The number of years your savings will be invested – both during and after your working life, and
  • How comfortable you feel about investment risks.

You can also invest your existing account balance in one or more investment options and select a different investment option for all your future contributions. For example, you can choose to have your existing accumulation account invested 80% in the Smoothed Option and 20% in the Cash Option. You can then choose to have your future additional voluntary contributions invested 100% in the Australian Share Option.

The Smoothed Option is FES Super’s default investment option, which means that your super will be invested in this option unless you choose a different option.

Smoothed

Aim

To provide a competitive growth investment with smoothed investment returns on a year-to-year basis..

Annual Returns for this option

Year ending 30 June Super Pension
2018 9.0% 10.0%
2017 7.5% 8.3%
2016 2.0% 2.2%
2015 6.4% 7.5%
2014 11.2% 12.5%
3 year average 6.7% 7.4%
5 year average 7.9% 8.9%
10 year average 6.6% 7.5%

When we say ‘smoothed investment returns’ we mean that an investment fluctuation reserve is used in which a portion of the Fund’s earnings are set aside in the good investment years (i.e. when returns are high) in order to supplement returns in poor investment years (i.e. when the markets may lose money).

The Fire and Emergency Services Superannuation Board reserves the absolute right at all times to determine when an investment fluctuation reserve is used for this option.

Objective

To earn at least the Consumer Price Index (CPI) plus 4% per annum over rolling 10 year periods (net of tax and fees).

Strategy

Invest approximately:

  • two thirds in shares/target return assets; and
  • one third in cash/fixed interest.

Strategic asset allocation

Australian shares 10%-50%
Overseas shares 0%-40%
Target Return assets 0%-35%
Fixed Interest 10%-50%
Cash 0%-30%

Suitability

For members who:

  • expect to have their super or pension invested for more than five years,
  • would like exposure to growth assets, and
  • want less ups-and-downs in their year-to-year investment returns.

Minimum investment time frame

Medium to long-term: if you choose this option, be prepared to stay invested in it for more than 5 years before it meets its objectives.

Expected frequency of negative annual returns

Less than three over any 20 year period (on average). However, historically this option has produced a smaller frequency of negative returns due to the use of an investment fluctuation reserve.

Moderate

Aim

To earn higher investment returns than cash while maintaining a conservative approach so the risk of capital losses in any one year remains low.

 

Objective

To earn at least CPI+2% per annum over rolling 10-year periods (net of tax and fees).

 

Strategy

Invest approximately:

- One half in shares/target return assets; and

- One half in cash/fixed interest.

 

Strategic Asset allocation

Australian Shares  15%                                                      
Overseas Shares  15%
Target Return Assets  15%
Australian Fixed Interest  30%
Cash  25%


(Note: Prior to 1 January 2016 there was no investment in overseas shares in this option).

 

Suitability

For members who:

- have a short to medium investment time frame (0-3 years);

- do not like risk; and

- are willing to accept lower returns for protection from short-term investment losses.

 

Minimum Investment time frame

​If you choose this option be prepared to stay invested for 1 to 3 years before it meets its objectives.

 

Expected frequency of a negative annual return

To achieve less than three negative annual returns in any 20 year period (on average).

 

Annual Returns

Year ending 30 June Super Pension
2018 5.5% 6.2%
2017 7.5% 8.3%
2016 1.4% 1.8%
2015 3.2% 4.2%
2014 9.1% 10.6%
3 year average 5.2% 5.8%
5 year average 5.7% 6.5%
10 year average 5.6% 6.4%

Cash

Aim

To protect member’s capital at all times.
 

Objective

​To earn investment returns competitive with other cash investments (Bloomberg AusBond Bank Bill Index), net of tax and fees, over rolling 12-month periods.
 

Strategy

To invest in cash or other short-term investments.
 

Strategic Asset allocation

100% Cash
 

Suitability

For members who:

- have a short to medium investment time frame (0-3 years);

- do not like risk; and

- are willing to accept lower returns for protection from short-term investment losses.

 

Minimum investment timeframe

If you choose this option, be prepared to stay invested for 1 to 3 years before it meets its objectives.
 

Expected frequency of a negative annual return

Not expected in any 1 year period, aim is to preserve capital every year.
 

Annual Returns

Year ending 30 June Super Pension
2018 1.4% 1.8%
2017 2.0% 2.4%
2016 2.1% 2.6%
2015 2.6% 3.1%
2014 2.9% 3.5%
3 year average 2.2% 2.6%
5 year average 2.6% 3.0%
10 year average 3.4% 4.0%

Fixed Interest

Aim

To provide a diversified investment in Australian Fixed Interest.

 

Objective

To earn at least the benchmark return (Bloomberg AusBond Composite Bond Index (All Maturities)) + 0.5% per annum net of tax and fees, over rolling 12-month periods.

 

Strategy

Invest 100% in Australian Fixed Interest.

 

Strategic asset allocation

Fixed Interest 90% – 100%
Cash 0% – 10%

Suitability

For members who:

- have a short to medium investment horizon (0-3 years);

- do not like risk; and

- are willing to accept lower returns for protection from short-term investment losses.

Minimum investment time frame

​If you choose this option be prepared to stay invested for 1 to 3 years or more before it meets its objectives.

 

Expected frequency of a negative annual return

To achieve less than four negative annual returns in any 20 year period (on average).



 

Returns

Year ending 30 June Super Pension
2018 1.7% 2.2%
2017 3.2% 3.7%

Growth

Aim

To provide a competitive growth investment.

 

Objective

To earn at least the Consumer Price Index (CPI) plus 4% per annum over rolling 10 year periods (net of tax and fees).

 

Strategy

Invest approximately:

- two thirds in shares/target return assets; and

- one third in cash/fixed interest.

 

Strategic asset allocation

Aust Shares 10% – 50%
Overseas Shares 0% – 40%
Target Return assets 0% – 35%
Fixed Interest 10% – 50%
Cash 0% – 30%

Suitability

For members who:

- have a longer time frame for their investment (5 years or more)

- like exposure to growth assets

- can accept short-term investment losses

 

Minimum investment time frame

If you choose this option, be prepared to stay invested for 5 or more years before it meets its objectives.

 

Expected frequency of a negative annual return

To achieve less than four negative annual returns in any 20 year period (on average).

 

Annual Returns

Year ending 30 June Super Pension
2018 8.4% 9.4%
2017 9.1% 10.2%
2016 1.5% 1.6%
2015 7.4% 8.6%
2014 11.7% 13.2%
3 year average 6.7% 7.4%
5 year average 7.9% 8.9%
10 year average 6.6% 7.5%

International Share

Aim

To provide a diversified investment in overseas shares.

 

Objective

To earn at least the benchmark return for overseas shares (MSCI World ex-Australia Index in $AUD) + 2% per annum, net of tax and fees, over rolling 12-month periods.

 

Strategy

Invest 100% in overseas shares.

 

Strategic asset allocation

Overseas Shares 90% – 100%
Cash 0% – 10%

 

Suitability

For members who:

- have a long time frame for their investment (7 years or more);

- can tolerate risk and investment losses from time to time; and

- understand the gains and losses that can occur in any share market.

 

Minimum investment time frame

If you choose this option be prepared to stay invested for 7 years or more before it meets its objectives.

 

Expected frequency of a negative annual return

To achieve less than six negative annual returns in any 20 year period (on average).

 

Returns

Year ending 30 June Super Pension
2018 15.0% 17.6%
2017 13.7% 15.9%

Australian Share

Aim

To provide a diversified investment in Australian shares.

 

Objective

To earn at least the benchmark return for Australian shares (S&P/ASX 300 Accumulation Index), net of tax and fees, over rolling 12-month periods.

 

Strategy

Invest all of the assets in the Australian share market.

 

Strategic asset allocation

Australian Shares 90% – 100%
Cash 0% – 10%

Suitability

For members who:

- have a long timeframe for their investment (7 years or more)

- can tolerate risk and investment losses from time to time

- understand the gains and losses that can occur in any share market.

 

Minimum investment time frame

If you choose this option, be prepared to stay invested for 7 years or more before it meets its objectives.

 

Expected frequency of a negative annual return

To achieve less than six negative annual returns in any 20 year period (on average).

 

Annual returns

Year ending 30 June Super Pension
2018 13.5% 13.9%
2017 15.4% 16.1%
2016 -2.2% -2.4%
2015 3.4% 5.3%
2014 20.0% 23.2%
3 year average 8.9% 9.3%
5 year average 10.1% 11.2%
10 year average 7.5% 8.2%